Gaining & Demonstrating Farm Management Experience - Tips for New Farm Managers

March 8, 2023

More Info

This session has held as part of the farm business management for beginners track during the 2023 MI Ag Ideas to Grow With virtual conference. This virtual conference held February 27-March 10, 2023, is a two-week program encompassing many aspects of the agricultural industry and offering a full array of educational sessions for farmers and homeowners interested in food production and other agricultural endeavors. Sessions were recorded and can be found online at

Video Transcript

I want to get us into talking today about the topic that brought you here this morning, gaining and demonstrating farm management experience. And we're gonna go over some tips for new farm managers. This is part of our farm managers or farm management for beginners session. My name is Jon LaPorte. And today as we go along through the program, again, feel free to put questions in the chat. Hopefully, we'll have some good information here for you about gaining and demonstrating this important topic of management experience. To start with, let's kinda review what farm management experience is. Because I think it's really important to define what it is people are looking for when they bring that up because it kinda gets confused with a lot of different things. Farm management experience is actually focused on making decisions that directly affect the business success or failure, possibly, hopefully not, of a farm business. And the reason that that's important is we refer to it as decision-making experience. That is all based on the fact that we focus on the choices made by a farm manager that really make that business successful or not in the short term and also in the long run. And so decision-making is a big part of this idea of management experience there on the farm. And it's very different because it's an important distinction between managers and employees. If you think about that for a moment, when you're talking about managers, those are the folks that set the goals that kinda make the overall plan for what the Farm is gonna be doing. They assign the day-to-day type tasks to the employees. So when that happens, when you think about the business, the managers are the ones who have to live with the outcome of those decisions. Whereas the employees don't. They get to go home at the end of the night. They get to kinda go off to their houses and not have to worry necessarily about the business from the overall production side of it. They worry about whether or not they're going to have a job, of course. But the manager has to live with all the outcomes of decisions made on the farm and how it affects the longevity of that business. And so it's very important to understand that when we talk about farm management experience, we're really talking about the decision-making aspect of being a manager. And so I like to highlight for people that because we focus on that decision-making, there are really three important components that go into farm decisions. And I kinda like to use this and I'm being very MSU Extension e here where I highlight the fact that kinda three stool, three-legged stool approach where what are the actual components of making a farm decisions? And really you can break it down into the production aspects, the financial aspects, and then finally the business. But the business is actually where we want to start with. As we think about business components and the business area of decision-making. This is where we start to talk about identifying the goals and direction of your farm. This also involves understanding what resources you have available, or possibly the limitations on resources that you're going to need to address. We also need to think about from the business side of thing, what are the roles and responsibility is gonna be needed for the day-to-day operation. And that involves knowing the people that are gonna be involved in those roles. What kind of skill sets they're going to need, what kind of knowledge they're going to need, and just understanding what goes into making business really functional. And so that also involves identifying the market and or possible revenue opportunities that you're going to have for your business. Because you want to raise something or create something that consumers are going to buy. If you don't have a product that consumers are going to buy, then you're going to have a really tough time keeping yourself and business. And so from a business standpoint, these are kinda where we start with our overall thought process on what the business is going to look like, how it's going to operate. Then we want to think about the financial components. This is where we get into the monetary impacts or the needs that are really driven by those business decisions. So if you think about that from a standpoint of each choice you make affects your financial ability. So we can think about that from the business decisions about what markets we want to be into, what's the potential revenue we're going to bring in. And even from the production side of things, what's the potential for what we raise? What's the opportunity we see for the revenue that would be received. And so we can look at things. Start to combine some of those production and business components into the finance and think about how it impacts how much money we have to work with. We also have to think about the money that we're going to spend when we're trying to operate our business and how that affects the revenue we're gonna get to keep, which is our profit. Lot of times people will want to talk about profit as really being focused on the money that we generate. But that's only the gross revenue. The net, what we get to keep is really the profit and we want to be able to keep more of what we generate if we're spending a lot of money and we've got a lot of expenses going out there. That's a financial limitation that's impacting our ability to meet our business components, meet the goals of our operation, and really impacts a lot of cases. The decisions that we have are what our options are within those decisions. Then that brings us to the production side of things where this is probably the most straightforward for most people we like to think about what we're producing. And so we focus a lot on maximizing our yield or output of the commodity that we're growing for sale. So if we're talking about livestock, even the decisions here are really going to be based on those financial availabilities in driven by those business goals. Because if we know the market we want to be into and the type of things we want to grow that's going to impact how we think about the production side of the operation. Managers have to realize how to meet those production goals within a lot of financial constraints. Which kinda can mean readjusting production goals to make sure we're achieving those overall business goals and that business success that we want to reach too. So there's a lot of things that go into this decision-making aspect. That's why this is a real big distinction between a manager and employee. Because there's a lot of these things that employees don't have to think about. As you kinda break down too. The idea of business side of things, the financial aspects and then production that go into this decision-making. There's just a lot of things you've gotta be able to think through and make sure the business is actually working towards achieving and it all interconnects. So it's a lot more difficult than just going out and driving a tractor or in some case, working with livestock, making sure the the feedings being done, day-to-day chores type things on, depending on the operation you're at. So we really want to emphasize that aspect. There's a big difference there. Now, let's talk about once we understand that, how we go about gaining some of that experience. Now I want to start with getting experience on the farm because this is often the most recognized opportunity to gain experience. And there's a lot of reasons for that. But I want to key in on really two main benefits. If you're gaining experience because you're on a farm already, you have the benefit of learning without having to pay for any of the assets somebody else is doing that, or somebody has already done that. And then you've got the ability to learn without necessarily having to manage all those day to day decisions of the operations right away. You kinda work your way into it and can gradually get yourself more comfortable into managing. This is often considered an advantage over individuals that want to start brand new businesses. But you've gotta be careful because sometimes these activities lack the involvement in the business or the financial components that really influenced them. And so we often have some caution with people that are already on a farm, especially if we're looking at generational farms, or we've got farms that they're looking to bring in an employee and a management team and maybe potentially take over the business. Because of the fact that we need to make sure they're not just doing the day-to-day production activities, but really getting the other two components that go into this idea of farm decision-making and management. And oftentimes, I like to kinda joke with the beginning farmers I work with. Because when we start to talk about things that go on, on a farm, I like to ask them, Why did you decide to do it that way? Why does the farm do the things that it does? And you can kinda tell there's a lack of understanding of all these components because of the common responses. Well, because we've just always done it that way. And that's usually a good indicator of if you find yourself thinking about that on your farmer. If those of you in attendance today are on a farm and you realize that, you know, I really don't understand why we're doing things the way we're doing. We just always done it that way. That's an opportunity that we want to talk about. Being able to help you kinda get some better understanding of the reasons why. And that's why we kinda tell people when we get to this point, let's, let's kinda stop for a moment and think about how we can avoid running into that disadvantage. The best way to do that is to really map out a process of becoming part of that farm management team. So that means discussing ways to be involved in decision-making. Understanding what those, what the components are that you're not seeing. But then also taking on responsibilities outside of just the production or what sometimes get labeled the labor type duties. The key thing to remember though, is that when you're talking to the current management team on your farm, especially if it's mom and dad, grandma and grandpa, or maybe you're an employee working with your employer, taking on those responsibilities, there needs to be some guidance from that existing management or those existing decision-makers to make sure that you're actually learning. You've not just being kinda thrown a task that you're not fully understanding how to work through. There's gotta be some communication, some guidance that goes along with that. So that's the main thing that I always like to highlight for people with looking for gaining experience there on the farm. Because it can offer some advantages, but we want to make sure we're not creating some disadvantages by missing the other parts that go into the decision-making process. Let's switch gears now and talk about, oh, excuse me. Before we do that, let's talk about a few more learning opportunities that can exist for folks on the farm. One of the important ways to get involved on the actual farm and the management team is by attending all the meetings organized by the management team so that you can gain some insight into some of the things that you've not seen before. Some of that information. This can include daily briefings with employees. It can include tax meetings. So if the farm meets with a tax accountant or maybe meeting with an extension educator like myself will do some tax kinda estimating with folks just to kinda get idea of what goes into that process. Retailer meetings are a great way to gain some insight into some of these other areas of decision-making. Because you kinda see what those discussions are like and what things you're needing to buy or what mean prices you're running into. The same for meeting with lenders if the farm has any debt that is looking to either take on or kinda has an annual meeting to talk about existing debt, you can gain a lot of insight into the financial and the business side of the forearm by being part of these meetings. And that also includes if the farm takes part in any kind of financial analysis review because of the fact that you're going to really get a good idea from those how the management decisions impact the productivity and the financial success of the operation. Each year, you kinda start to pick apart some of the strengths of the operation that you want to keep seeing move forward. But then also some areas maybe you want to work to improve upon. The other area that is really important and a great opportunity for learning if you're on the farm is to get involved with the farms record keeping system. Because farm records are the foundation of every farm decision. And so we need to understand when we're thinking about decisions going on, what information is being tracked and why, what kind of decisions are we trying to make that we're tracking information that we want to be able to review later to help us out in that process. You can gain knowledge by entering deposits, or writing checks into those records. You can, in terms of taking on responsibility, you can be in charge of ordering seed, fertilizer, other inputs, making sure those records get put into your record keeping system. Keeping track of the feed or supply inventories that you're using throughout the year. So you can kinda keep those inventory changes up-to-date and even tracking sales. And I've got grajn and livestock here, but it may be a flower sales, maybe tree sales, keeping track of that information. Even if you're not entering in the deposits, you can at least keep track of that information as it comes in. So you kinda get an idea of where maybe the income side of things there's coming for the operation. Now let's switch gears and talk about those folks that are not on the farm and are looking to lease property. And this is a case where if you don't already own the property, we have a lot of farms that started out using their own property to at least kind of get things initially started. But eventually you want the business to grow. And there's a lot of cases where farms need property starting out to really get things rolling. This is often the most common method for startup farms that don't already have a farm property to work with. And we have a lot of farm that start out that way. They're trying to look for some kind of base of operations to start with. And this can actually be the most challenging method. And this is why startup farms typically run into a few disadvantages. Because there's a lot of competition out there for property and there's a lot of high rents that typically are being paid, especially right now with the way the farm economy is. And most of our startup farms end up being self-funded in the first year. And that's typically because lenders want to see at least one year of this management experience before they're going to actually offer the opportunity to provide any kind of financing. And so that first startup year getting established is usually self-funded. And this can be a concern if you're looking to rent ground and you've got to pay that rent upfront. This is why we see a lot of startup farmers are very, very supplemented by off-farm income. To try to help things get rolling. And there's not a lot of financial support starting out that first year. There are a lot more programs that come along, been available here in the last several years that do help with that. But this is still very common thing that a lot of our startup farms are self-funded and kinda have this challenge of finding lease property. So let's talk about now how we kind of think through some considerations in this opportunity for learning, even if we're in the process of trying to find leased property. Because one of the most important things you want to do as you're looking at properties. You want to make sure that if the property is going to actually meet your production needs. And we think back to the business and the financial components. The financial, we kinda know we've got a rent to pay the business's side of things. We know what we want to do. We've got our business goals and our plan. Does the property we're going to use to meet our production goals to fit the rest of the farm. Going to actually meet those needs because not all property is create equal. And just because it's available doesn't mean it's a fit for your business and your business goals. We've had a lot of conversation, especially the last year with producers that are looking at picking up a piece of ground, but it doesn't fit their business goals. Or it's being there's a lot of money being asked for. And it's just going to put the farm in a situation that's not conducive to meeting business success. You want to think about does that meet your overall needs? You also want to look at the yield potential and suitability for any kind of crops that you're looking to raise. Looking at the soil type and the soil health. A good example I've got on the screen here is strawberries grow best on loamy or sandy soils. If you were looking at a piece of ground that you want to raise strawberries on, but it's more of a clay field. You've got some considerations there about does this really make the most sense for what we want to raise? What are some of the advantages and disadvantages? I'm not saying you shouldn't necessarily plant the strawberries there, but there is usually a strong indication of it's not a good fit from a compatibility standpoint, what are some of the other things that are going on that would have to be kind of in your favor and make that really make sense. You know, is the rent the right price, is the soil health in good condition, those type of things where you want to make sure overall that's a good fit for your farm. Now, there is also this opportunity about  renting buildings, we've had a lot of interests for people renting buildings the last year, maybe the last two years. You want to make sure that it's an actual healthy and safe environment and a productive environment for what you intend to use it for. So if you're thinking about renting facilities to raise livestock in, maybe store some forages. That's very different than if you're going to rent a building to store equipment in. If you're looking at a facility to store even grain, sometimes to store in wagons or in something other than grain bin. Is it really a right environment to be storing those things in if it's intended for one use versus another. And so that kinda plays into is the property you're renting you. But if not farm ground, but more of a building situation, a good fit for what you're wanting to do. Some other considerations as you want to kind of think as we think about the financial side of things, how much is too much to rent? You know, what is what is the rent going to cost you and is it too much? This is where creating a farm budget can help you outline what your cost of production is minus that rent. And so this is, this budget should be a really reasonable expectations of how much cash are going to need to operate on, but also to make the debt payments because that profit that you're looking to generate, some of that's got to go towards debt payments. Some of it may have to go towards family living, those types of things that you want the farm to be able to pay for. So how much of that profit you'd have from that cost of production before rent is going to be there to kinda help you figure out what a reasonable rent figure is. Your maximum rent pay would be where your available cash equals cost of production and debt, or what we call a cashflow breakeven. So when you factor in land rent into all the other costs of production and the debt and the other obligations. When you hit that breakeven, that's kinda the maximum amount that whatever that number is to get you to breakeven for the land rent, that's your maximum amount to really pay and you have to decide, okay, and that's the maximum number. But do I really want to pay that much? Is that really reasonable to offer that much because you don't want to over offer on the rent. And so we've actually designed a tool to help people with this, is a landmark calculator where you can input the, this is mainly based on the crop side. But thinking about what you're looking to pay for land, when you look at an idea of what's those operating costs are going to be, what's the expected income going to look like? And then you can look at your profitability before land rent. And then also look at the profitability after the land rent. To kinda see what do you have in a net return that's remaining to pay for those other things. We've talked about debt, family living. Maybe you want to put some money towards next year's inputs. So do some prepaying. Or maybe you want to be able to put some working capital into your cash reserve and you start to factor in those kind of thought processes of okay, I've got X amount of dollars I could rent, but I wanted to make sure I've got a little bit leftover to pay for some other things. So what that number looks like in terms of what my maximum rent could pay, this calculator kinda helps you to kind of think through that a little bit. Now for everybody, whether you're looking to rent, or land, or you're on the farm. The other way of gaining experience is through education. If you go talk to a lender, you're going to find that in a lot of cases education helps to supplement at the very least one year of management experience. Because there's a lot of value in the educational component. And the reason for that is because knowledge is really a key to a farm manager success. You can obtain that through firsthand experience like we've been talking about, or through some kind of learned instruction, which is oftentimes what we consider education. Education can take on a lot of different forms. It could be through a secondary education system like a college or university. You could actually attend Cooperative Extension programs. We actually do have programs offered throughout the country that offer an opportunity to get a certification certificate that allows you to be able to showcase that I've completed this program. This is something I can use to demonstrate. I've, I've got some basic knowledge. There are mentorship programs out there where you can work with an existing farmer or even apprenticeships where you can actually gain knowledge working for an operation as well. And some of those are more available in some states than others and  in Michigan, we continue to look for new opportunities for mentorships. There's a lot more interest in mentorship programs. But we've got some that exist out there. Those are wonderful to look at if you're trying to gain experience that way. But the key thing here is that education is also an ongoing process. You want to be able to study what you don't know. But you also want to be able to challenge what you think you know. Because there's things that change. A lot of times. The one constant we have in agriculture that things continually change. We come up with new ways of doing things. We refine our production practices, we get more efficient at things. And so what we think we know, kind of going back to that question earlier, why does the farm do what it does? Well, we've just always done it that way. Well, challenge why you've always done it that way. And think about what goes into that and what we think we know about those things. Because then the third aspect of this, as you start to identify what you need to know to be able to be successful and continue pushing your operation forward. And I want to kinda highlight it as we think about education, we come back to this idea of the business, financial, and production aspects of our decision-making. We can really kinda turn these around and look at these from a revenue and cost side of things. Because we can really start to begin our educational pursuits by breaking our decisions into really a lot of different areas, different aspects of different decision types that we have to make for the farm operation. So as we do that, we think about the different types of choices we have. We can really start to identify actions that we can take and the resources that we're going to need to make our operation successful. I wanna kinda highlight that in a couple of examples here. Where the, from an animal health standpoint, when we think about trying to maintain animal health, our focus is on maintaining the health and well-being of the livestock. And so every action we take to maintain or improve that health we know is going to carry a cost. So the decision we make is going to have a financial impact. It's also going to have a production impact, again towards our overall business goal. And so we can start to understand the costs of this by creating a health management plan. A lot of farms have kind of a health management plan that they've worked out what to do when animals get sick. What's the process you're going to follow? Really is a plan that outlines activities the farm's going to take to you. Think about it, kinda prevent, maybe monitor and diagnose and eventually treat the ailments or the injuries that the animal has. There's also in the Health Management Plan a lot of cases where we start to think about feed and nutrition because we want to make sure those nutritional needs are met. So as you start to really fine tune and think about all the things you're trying to achieve. What are the actions you're taking? Then what are the costs involved in making those happen? And you start to kinda think about, do we really want to approach things from this direction? Do we want to go in another direction? Now you're making decisions that are going to impact that overall success of the farm. In this case, the overall health of the farm. But whether or not you're going to have something to actually sell and a product. Whether you're going to, you know, the animal itself is the product or like for a dairy farm, it's creating the milk that you're going to sell. Those type of things really helps to kind of whittle down to what those decision aspects are. Now let's go to more of a crop example for folks that are in maybe field crops or vegetables and fruit. We think about pest management. We do the same thing when we're thinking about pest management. We want to be able on maintaining that plant's health from pest infestations. And so in this case, we know that every action we're going to take to manage our pests are going to carry a cost. So we can start to understand that by creating our pest management plan. A lot of farms have these, whether it's a written down plan or you kinda know in your head what you're gonna do every year. You've, you've kinda thought it through. Your plan, really tries to think about what are those activities we're going to take to identify the pest and what the potential damage is going to be. And then what are the control methods that we're going to use? Are we going to use a biological control, a chemical control. There's a lot of different methods we can use to try to control those paths. And then when is that control gonna be implemented? There's actually an economic threshold versus a population threshold that we tend to think about with pest infestations. At what point are you losing money if you don't take action? And you can kinda do the same thing actually with a livestock example to if you think about, at what point are we going to potentially lose money if we don't maintain the health of that animal. So you start to see there's this intertwining of the costs and the production and the impact the overall business goals you have on the farm. So those are some ways about gaining experience. Now, the thing that we haven't really touched on yet is getting to this idea of demonstrating that experience. There's a couple of different ways you can go about doing this. The first one is often looking at your farm records because they're going to illustrate your skill set as a farm manager. And people often overlook this. They don't think about this as being something really important to demonstrating your experience. Because if you've got records that are really organized, you've got them up to date, you reconcile those records. So your cash transactions, you've got everything up to date. Your deposits are reconciled to your bank statements. You've kept track of all the money coming in and all the money going out of the operation, it's as about as up-to-date as you can get. That's a good sign of management. That means that you're really paying attention to details. You're tracking information. You're not six months behind trying to catch up on things. You've got a really good handle on the information coming in. And it's a good indication that you're tracking good information that you're going to use to make decisions. Now on the other hand, if your records are really unorganized, there's missing information or it's really incomplete, then that's often a sign of poor management because you're not necessarily tracking the information you're gonna be able to use. The bare minimum kinda gets you by for tax purposes. But farm records aren't just for taxes, they're not just for the lender. They're there to help you kinda look back and think through what happened on the farm. How can we benefit and look at some changes we want to make? Because we'd been tracking good information. A question I often get asked is, how can we tell what type of records we have? And I think there's a really good system you can use to do that. And it's really simply reviewing them. You can go through and kind of focus on a certain area of the operation that you know, you've been tracking information on. And think about a question that you might get asked about if you're in a lender meeting, if you're in a tax meeting, you're gonna get asked a question of, well, what about this? How did the farm do with this? If you can go look at your records and reasonably find the answer, I'm not going to say it's an easy answer to go fine, but you've got some reasonability able to actually sit down and find that without spending a lot of time on it, we're having to go look for a lot of additional information. Your records are probably pretty well organized. But if you've got to spend a lot of time and you've got to start looking for other information to figure out what's missing. That's a good indication that you need to do a little bit more work on the record-keeping side of things. Let's, let's go through an example of this. Say a lender wants to know the production, the prices, and the revenue for crops you're growing. And let's say in this example that you're raising watermelons and sweetcorn, we'll use a vegetable example here. If you've got well-organized records, you can tell how much was sold, what those prices received were and when those sales occurred. And that's kind of it's kind of getting to the type of information that are really asking for. But if you've done a really good job with the details, you can really demonstrate your decision-making skill set. Because you're gonna be able to calculate the average prices you received, which gets back to the market you're in kinda business side of your decision-making. What market are you actually working within? What the total revenue that you brought in was? So we're getting to the financial side of the decisions. You can know the limitations or constraints you have to work within. And then how much production was actually raised for you to be able to sell and to be able to work towards the overall goals of the operation. So your records might look something like this, where you've kept track of what the crop was, the dates things were sold. If you're talking about a harvest to sale type situation in this example, what we harvested was what we sold in that day, what the units were, the prices received, and then just the total income that we obtained. You can see here in this example, you're walking through where you've got a lot of good information here. You can actually whittle that down too. Lot of good basic information where we can look at what the total production was. Kinda highlight this here on the screen for you a little bit. So we can look at the total production for both our crops, how we sold those units, what the average prices were that were received, and then also the total revenue that the farm was able to generate there. So really important information that if you've got really good details and we're not talking about like a novel length of details. We're just making sure we have a little bit of notations and information to be able to help us go back and kinda break this information out. And that's where financial records are really important. Because this is an indication of whether or not the operation is a profitable business. That's what people look for in your financials to start with. You can track the inflows and outflows of the business to see what's the cash situation doing. Are we regenerating a lot of cash. Are we keeping a lot of cash at the end of the year? Money coming in, money going out. What's the actual flow look like? Those details can help with revealing the cost of production. People often want to think about how do we find our cost of production? If you keep decent amount of details and actually have some good information in there, you can really break down your cost of production, you know  if your fertilizer, e.g. your notating which crop those go-to or if you've got feed that you're splitting up between on a dairy e.g. you've got some going to the cows, some going to the young stock, the calves or, or maybe the heifers. If you're kinda keeping track of that information, you can start to break out some costs of production information later on when you go back to review it. And that's where using a good record keeping system can kind of help depending on what type of system you're trying to or type of information you're trying to track down. The same is true of production records. Production records are really the historical proof of past success. People look to those to see what's the success of the production side bend. Does it make sense for the size of your operation? How does it compare to other farm operations that are in the same type of production areas? It's not just an accounting of the amounts you've grown though. This can also include a lot of details in terms of how the production was raised. Past production and especially as an indicator of future performance. So what you've been able to do in the past, we can expect you're going to at least be able to do that much in the long run. But we wanna be able to have a good idea of what that success looked like. And those details that you have in those records can help identify how much of that past success is based on your actual decision-making. Was it Mother Nature that really gave you the great yields that you were seeing? Or was it some of the decisions you've made, especially if you can see an increase in production over time. Or you can see where the production has been maintained at a fairly stable levels over time regardless of what's going on out in the cropping world, those type of things kinda help to outline your decision-making involvement in that success. Let's look at a quick scenario. This where we've been looking at a farm and you realize after several low yields over the last couple of years, you're gonna do a soil test and figure out what's going on. And that test indicates that the pH is a little bit out of balance and you're reading some nutrient deficiencies. Well, what you can do is you can develop a nutrient management plan. In this case, we're talking about applying lime and we're going to rebalance the soil pH levels. So we don't typically think about these as production records or production type things, but this is really driving it, how we're maintaining production. Because we've gone out and got soil samples. In this case, I've got here on the screen might be a little hard to see where we're looking at some actual soil test information that we've gone out and have this kind of grid sampled or zone sampled. We have the fertilizer that we've purchased and the lime we've purchased and we've got records and invoices for that to show that we bought things to kinda help get the field in shape. But then we've also got this idea of a, an application map. This applied map sitting here of the, what we actually spread on the farm and how those things were applied. These become really good pieces of information to verify. what your efforts have been to improve production and to reach those farm goals and these are all part of your production records. These become really great references for when you kinda wanna do some fine tuning and look back, see what did we do? How did that work out? And what do we want to do differently moving forward to make sure we're still improving our production and maintaining the overall goals we have for the operation. Now I want to touch on business plans a little bit as well as we think about demonstrating experience because business plans get brought up a lot. We've had a lot of information we've put out this year on business planning. Lot of questions around business planning. And I want people to understand that there's a common misconception that these plans are really created mainly to help you get financial assistance. They are not.  Business plans are written for you. They're your guide point to help the farm and that's their main purpose is to help guide your operation. It's a written, written series of information that you put together about What's your available market opportunities are and what you ultimately decide to be involved in. There's management and organizational structure type questions you answer, but how are we going to actually formulate the business? Who are the people involved? You think about the operational side, the production, actual raising of the farm, what's going to need to happen? How are we going to handle that, which most people think about pretty generally. But then we also think about the financial plan and how we're actually going to make that all come together. This really becomes a written guide to talking about decision-making. It's how you're going to take all the resources you have. How are you going to structure the operation? How are you going to make the operation function? And essentially what is going to guide you towards what types of decisions do we have to make year in and year out to make this plan actually be successful. The other thing about a business plan, is its something that you want to review and update regularly. Now, I don't mean every week or every month, but periodically, at least a couple of times during the year, sit down and review it and say, are we working our way towards our goals? How are the decisions we've made impacting our pursuit of those goals? Have we had to shift plans that we had within this written document because of market changes, because of management or operational changes. And you start to use this as more of a guide point. And I have on the screen here a really good example, really good guide of building a sustainable business plan through the SARE group. It's a great guide on developing a business plan. We also have a number of resources through MSU Extension on this topic. But I want to highlight this because this often becomes some thing that gets brought up about when lenders want to see some documentation on your management experience, they'll ask for your Business Plan at times, but don't be caught up in writing it to them. Make sure it's focused on putting all these components together that we've been talking about. But your decision-making and how it's going to make that farm successful in utilizing the resources and the opportunities you have in the market. The other thing I want to highlight is that when it comes to demonstrating experience, and I'm doing this last, but it's probably the most important area to demonstrate your experience is really narration. It's your ability to talk about your operation, to talk about your experience, and be able to kinda walk people through the decisions you've had to make. Because demonstrating experience isn't just about visible evidence. We've talked a lot about visible evidence here in the last little bit of the presentation. And what we really want is that it's equally important that you're able to talk about your farm. Because when we think about it, it's your operation, it's what you bring to the table as a farm manager, it's what you want to see for success. And you should be able to talk about those things. So whether it's a lender or a tax person or, or just, you know, a fellow farmer or sitting in a coffee shop. You want to be able to talk about your business and, and have people understand that you really understand the ins and outs of the decisions you have to make on a daily and routine basis. And the reason for that is that people want to work with you and your passion for farming. They don't want to work with your business plan. They don't want to work with your farm records. They want to work with you. And they want to know about you and how that passion you have translates into the operation that you are building and looking to continue to be sustainable. They want to know what success looks like to you. And that's something that if you talk about the decisions you've had to make and maybe changes you've made along the way. How that impacts that success and what that really looks like to you and what you're trying to strive for. Especially people want to know how you've overcome adversity because every farm has adversity, you're going to experience something along the way that's going to throw up a roadblock. You've got a work around or hurdle, you've got to jump over. How have you responded to that? That's a very important question when talking with lenders. That they want to know how you accounted for that, how you worked through that. And you want to be able to talk about that. Because reading about your farm just isn't the same as hearing about the farm from you. They want to understand the person they want, they're gonna be working with and making this investment into to help the operation go forward. Which is why communicating your knowledge, understanding, and passion is really the most crucial part. But demonstrating that management experience. So what I wanna do now is kinda shift a little bit to kinda do. Have a little bit of fun here. Where we talk about some of the myths that go into farm management experience. The first myth that often comes up is this idea that experience from on-farm opportunities guarantees success. We spent a lot of time talking about that at the beginning of the session today. And a lot of people think that this person is coming from a farm. They're gonna be successful. That's not necessarily true. Experience gained on the farm is really helpful. But it's not a guarantee. We talked about before if it's just a focus on the production activities, you might be missing some of those business and financial pieces of information you need to know to be successful. And so it doesn't matter how much on-farm experience you have or how much it exists. If that skill set is incomplete. We want to make sure that if we've got on-farm experience that you've really got all three of those components. So that three-legged stool, we've got the business, financial, and the production side of things to make sure it's a well-rounded understanding of being a farm manager. There's another myth that often comes up that one-year experience is good. Regardless of how the farm did. I farmed for a year. I've got experience. That's all I need. Well, that's really not true with a little bit of a stipulation. I apologize with a lot of text here on the screen. And these slides are gonna be made available for folks. But really essentially what we want to get at is some farms take a little bit longer to reach a level of profit, so you're not necessarily going to see success in the first couple of years. And that makes sense if your especially growing fruit or you're dealing with livestock, that it may take more than 12 months to actually reach a production level that you can sell something at. And while we want to see that profitability, we want to see that success right away. There are some cases where that doesn't happen right away and that's not a reason to get alarmed. What matters is, what was the decisions that you made along the way? Did you make good decisions? And really the reason that you haven't gotten to that level of success yet is because of things outside of your control, like the time it takes to startup. Or maybe there were some issues with you're raising a crop. There were some weather issues or livestock, there were some sickness issues that you had everything in place to try to mitigate those risks. But they still impacted your productivity and your ability to sell and have something for it to generate the revenue you're looking for. So the point here is that good management decisions are being made. And if that's the case, yes, then a farm can still be considered to do well for the stage that it's at, your decisions in how you actually manage the operation in those kind of poor, profitable years is gonna be looked at and people are going to want to know what was your involvement in that. It's outside of your control. It's still considered good experience. Especially if there are some things you learned that you're implementing to change moving forward. A third myth I want to bring up is that this idea that you've got to manage a large farm to be successful. This is not true. We have a lot of successful farms in Michigan. A lot of them are smaller size farms. It is not dependent on the size and scope of the operation. Most often people kinda put the attention on the larger farms because they buy a lot of inputs or they sell a lot of product. But really, if you're in a good market and you're making good management decisions, you're generating a lot of profit, you're building in meeting those goals you have for the operation. You can be successful regardless of what size of the operation it is. But you want to make sure that you're doing everything you can for your operation. Small farms can be just as successful as large farms in some cases, more successful. Especially we've seen that the case for that in our own state here, the key is really finding that market you can operate in efficiently and be profitable to meet those farm goals. And the last one I want to go through really quickly here and then we'll kind of get to where we open up for questions. Is this idea that taking over managing a family farm is easier than starting a new business. And this one is neither true or false. And the reason for that is because there are certain advantages existing farms have. I mean, you've already got the assets sitting there. You don't necessarily have to go out and buy a lot of new things. But transition can be a little bit difficult to navigate. You're talking about your interests and goals. You have for what the business is gonna look like when you're managing that operation versus those of your family that's currently managing the operation or if you're already part of the management team, you're still going to have some differences in views between senior and junior generations and maintain that family harmony is often a challenge. It's important to remember that starting a new business has its own set of challenges as well. So it's really a personal preference. And what the business goals are of the operation. Determine which is going to be the best option for you. So some final thoughts here before we move into the question period is, when you're starting out. Everyone starts from a different level of experience. And so that means your potential is not based on what experience you begin with, but rather how much you're gonna gain in your farm decision-making. So how much you can still build upon and gain that experience moving forward. Gaining experience is that ongoing process. It doesn't stop anywhere along the line and continues to build. And having an accurate and honest assessment of what you need to learn is really, really important. Seek out those opportunities that are going to challenge what you think you know, to identify what it is you need to know. Because really the only real limitation is your willingness to gain an improved management abilities that you have and identify what it is you need to learn. Because you've got the opportunity to be successful in whatever type of business you want to be involved in. As long as you do the right steps of identifying the things you need to learn and continue to challenge the things you think you already know about managing your farm operation. A lot of potential there and I want to I know we're kinda pushing time here. I want to make sure we have time for questions. So start off by saying thank you and highlight that we actually have a resource guide for folks on farm management experience. And that it can be downloaded at the MSU demand Series website. It's called our farm management experience resource guide. It's a nice big bulletin with a lot of links and information on a lot of different aspects of gaining management experience. Yeah, I have a question for you. Sure. Jon, I've been looking to try to get some new, a new crop record keeping system, but I'm using MSU NM  for years and it's getting pretty antiquated with my new computer. Any thoughts on new systems out there that can capture a lot of what we captured at MSU. And then pesticide records, fertilizer records, crop yield records, maybe some financial aspects to that. Any ideas or can you direct me to some sources because I struggled to find it. What I would think is acceptable crop record system to replace the MSU NM  program that I've been using for years that captures all that. Yeah. There's actually a there's a PDF version of an actual crop production records book that I know a colleague of mine has actually worked on updating. So we've got a PDF version that we can make available. I'm not sure if it's linked on our field crops or vegetable and fruit pages, but we do have one that's still floating around that I know is getting updated. And that's one thing that I know is helpful. And I think they're looking to actually  not only update it, but maybe make it maybe Excel accessible as well. The, that's a great question though, because the idea of looking for a system that really encompasses everything is often a big challenge and you ultimately need a couple of different record programs depending on the farm operation you're working with. And if you're using the computer software, probably the best program that I've run into for farm records is probably PC Mars out of Iowa and QuickBooks. We've actually done some work with QuickBooks here at MSU, where we have a guide now it's out for QuickBooks users that kinda tailored it to farm production. And it's, QuickBooks is designed more for folks that are more of the non-farm business, but we've worked on trying to develop a guide for that. In fact, my colleague, Corey Clark, who will be speaking this afternoon on farm succession, actually was the lead behind that. There's a number of programs that are out there, I'd say in some cases, depending on what type of information you want to track. Even a basic Excel program that just keeps track of things or even a notebook. There's nothing against pen and paper. If people are confident using pen and paper, there are a lot of different options that exist out there. I don't have a list of resources here at my fingertips to be able to put in the chat or anything. But they're depending on what you're trying to look for. I do know we have some resource we can list on our farm management page. We also have some that we've outlined on our demand Series website that it can be used for that. But there's definitely depends on what you're trying to do and what you want to look forward. Hopefully, someday we have an all encompassing system that captures it all, but we don't quite have that yet. I'm looking for something new and because for crop records primarily and I haven't found anything I like and I'm still looking if anything comes up, any links or anything you can send me. I sure would appreciate that. Yeah, sure can. In fact, I'll make sure, I'll I'll look up that PDF doc now and make sure that's included for for one of the resources we put with the recording here. Great. I see in the chat we've got a question here on, let's see So question that we have in the chat is, how many years of farming experience is really needed to get a farm ownership loan through FSA, Farm Service Agency at USDA. And the official documentation says three years. I've actually, one of the things that we highlight in our farm management resource guide is the fact that the program, they've got three, there's three years. But the three years is kinda got a little bit of a caveat to it because education does factor into that. There can be things like military service that factor into that. There are a number of different ways you can quantify that experience, college education that really helps you to get to those three years. So it's not necessarily you have to have exactly three years of farming. There are some caveats in there that allow you to utilize some of these different aspects we've talked about, especially on the education side, to help you to meet that requirement of meeting that ownership loan requirements through USDA. And so that's where it's really important to think about and keep track of and in your records, especially what you've, what you've actually got for experience, what things you've done. Because if you offset some of that with the education and you've got maybe a year or two of actual experience to throw in their for farming that allows you to get to that loan opportunity and meet that eligibility before you've gotten exactly the full three years thrown in there. I should add the other part of that question was whether or not that was up to the USDA Farm Loan Officer. There's criteria that they have to look at. They do have some different things they can look at to kinda help you kinda figure out do you meet those requirements? There is some subjectivity that comes into what they're looking at and making sure that it meets that criteria. But there is there is an actual criteria that all loan officers use, even if you're not talking to USDA, when you're talking to I'll use another lender, more commercial lender like a GreenStone Farm Credit or a Chemical Bank type operations there. They have criteria that they look at as well. And so what you look at is they have to help you determine does that really meet the criteria? And do you have the information to help them identify very clearly that you meet that criteria. So that's where your records really come into play to your ability to talk about that experience and demonstrate that experience. Because they're going to want to be able to quantify. Does that really meet the qualifications? Alright, not seeing any other question. I want to thank everybody for coming out today indefinitely. If there's any questions you have, feel free. I'm gonna put my e-mail in the chat. Feel free to reach out to me, ask me to help with any questions you have related to this topic. And thank you once again for coming out and I see some comments in the chat. Thank you all for attending and I appreciate the compliment and hope this was helpful for everybody.